Startups lose out by trying to do everything in-house

We recently posted an article on “Why Asia is the Place for Startup Success”, looking at the competitive edge of setting up a startup in Asia. As a follow up to that article, we will be looking more into how a startup, regardless of its location, can gain a competitive edge over other startups.

Just as how you should evaluate the position of your career with tools like the SWOT analysis, it is just as (if not more) important for you to properly evaluate the strengths and weaknesses of your startup, in order to make it a cut above the rest. By doing so, you can maximise your strengths as a startup and have a competitive edge over others.

Startups lose out by trying to do everything in-house_01.jpg

The challenges of running a startup

While startups have been a wonder of sorts, especially in recent years, with many seeing success (for example SMEs make up 99% of Singapore’s enterprise), they don’t come easily. The startup market is competitive and, as a small enterprise competing among sharks, this doesn’t come without its challenges.

One of the key challenges faced by the majority of startups is that of having to do everything under a limited resource. Startups like SMEs are in a similar predicament, where conventional ways of throwing more resources at the problem is sometimes infeasible. This means startups and the like have to find more innovative ways to get around a certain situation, a problem bigger corporations with more at their disposal would not have.

The limits come in many forms. One of the more obvious of these is money, or the lack of equity to help drive certain projects forward. Another is human capital. As startups go, many build their foundation on a small number of talent who make up the core team. While they are usually highly capable, passionate and motivated individuals, they are constantly under the stress to wear multiple hats simultaneously. This can mean stretching the talent really thin, which is unsustainable over an extended period of time and can be bad for the business. A study on multitasking found that that multitasking actually made organisations less productive by 27.5%, which accounted for 32% of the total cost of projects.

Skills, or a lack of variety in the skills present in a startup, can be another limitation that SMEs and startups face when competing in the market. Instinctively, we assume that the people who make up the startup or SME should be very strong in what they do and multi talented, and that may as well be true. However, this may not include the necessary skills required to run a startup business, for example bookkeeping and payroll processing which are both highly demanding and require a certain level of understanding for it to be done well.

Startups lose out by trying to do everything in-house_02.jpeg


The secret weapon of being a small enterprise

Startups and SMEs can come with a handful of challenges. Yet let’s not kid ourselves to conclude that they have everything going against them. After all, we are seeing a lot of these startups succeed and prosper.

The small structure of startups means that they can more easily adapt and implement the necessary changes according to the needs of the market. This, I would argue, is by far the strongest competitive edge that smaller businesses have over larger corporations. The agility to move at a quick pace and be the first of the pack to address the needs and demands of the market. Whereas, in larger corporations, a project may need to go through multiple layers of hierarchy and bureaucracy before getting the green light, which can be a great hindrance when speed is the deciding factor.

Outsource the heavy load of payroll to get your game on

Knowing the strengths and weaknesses of a startup, how then can we optimise the competitive edge in order to stay in the race for the long run?

The answer is quite simple: by maximising your strengths and minimising your weaknesses. This means understanding the limits and focusing the majority of resources to where it matters. A good way to look at it is through the 80/20 rule, by applying the Pareto principle to your enterprise. Perhaps you’ve already heard of the 80/20 rule before, simply put it is a discovery by Pareto, a sociologist, that a lot of things are distributed in this pattern of 80/20. The observation he made was that of all the things we do, 20% of our actions yielded about 80% of all the results. What this tells us is that there are some tasks that contribute more to the end goal than others.

Startups lose out by trying to do everything in-house_8020_outsource payroll extra.jpg

By applying the same mode of thought, we may say that, in order to produce the most, we should focus on doing more of the 20% and reducing our efforts on the other tasks that yield less. So what does this mean in the case of your startup or SME?

When applying this concept to your business, the best practice for a startup or SME is to find solutions that help maximise the agility and focus on the things that really matter for the company, i.e. the 20%. A tried and tested way of doing this is by shedding the extra weight of tasks to outsourcing services.

Startups lose out by trying to do everything in-house_03.jpeg

This is especially true for functions like bookkeeping and payroll which require more time and attention to get right. So how exactly does outsourcing tasks like payroll and other HR services help sharpen your startup’s competitive edge?

First of all, by outsourcing complicated tasks such as payroll, you in-turn free up time for your team to really concentrate on their core competencies which can drive higher results. Outsourcing services also helps fill the knowledge gap, as not everyone has the right expertise to handle payroll processing and other HR functions. There’s also the added benefit of mitigating risks, so you’re not bearing the burden when mistakes happen. By outsourcing your HR functions, you can also drive faster ROIs at a lower cost when compared with hiring an employee and training them to do everything in-house, which adds unnecessary headcount.

Ultimately, your goal is to spend most of your time, energy, money and attention on your strong points. To find simple solutions for the rest of the business in order to secure the team at its highest functioning status, as opposed to trying to handle everything internally and expending unnecessary effort, which lowers your company’s agility and ability to respond to the market.


If you are looking for HR Outsourcing Services in Singapore, Links International is an industry leader in innovative HR outsourcing with services such as payroll solution, visa application, PEO/EOR Secondment, outplacement counselling, recruitment and more! Contact us for more information on how we can help leverage your HR function.

HRO Banner.png